Get an "A" on your next report card

I can still remember the days leading up to report card day as a school kid. All I could hear in my head was, "Make sure you get an A, son." It was what was expected of me -- to be the best. And well, not much has changed in the real world. People, and in this case of this article, investors, expect managers they invest with to be the best. However, one area in which LPs do not feel GPs have been the best is the quality and quantity of communications between them and the GPs they are invested with.  

So how would your investors grade you on your next report card when it came to your investor relations program? What grade would they give you based on your communications and reporting throughout the life of the fund? Well, if you are not sure you would get an A or if you want to ensure you do, here are a few tips:

1. Timely Reports -- Annual meeting and quarterly investor updates; financial statements should relate to the most recent quarter. Reports should include a detailed summary of the period's activity and a drill down to detailed metrics at the fund and property levels. 

2. Consisting Reporting -- Clear and consistent reporting and valuation policies and a willingness to discuss them. 

3. Regular Calls -- Quarterly investor calls presenting LPs with portfolio and asset-level updates and descriptions. Portfolio and asset-level data could include occupancy analysis, tenant summaries and leasing activity, with actual vs. budget comparison for all properties. 

4. Return Projections -- Tell them what "sticks to the ribs" and provide net return projections at the fund and asset levels, with international funds showing returns in domestic and foreign currencies.

5. Drawdown Notices -- Detailed drawdown notices summarizing projected contributions and distributions. 

Our industry does not yet have an agreed-upon standard on what should be included in an LP report, which leaves GPs in the position of guessing, surveying and learning through experience what their investors want in terms of communications and reporting.  However, what is crystal clear is that investors definitely want more than they have been getting over the past few years. 

It is therefore most important to recognize this fact and to understand and anticipate the needs of your investor base. Follow some of the tips above to ensure you get an "A" on your next investor report card!

Sagar A. Dalal is the co-founder and managing principal of Beckerman’s real estate fund advisory division. The division works with real estate fund managers by providing expert fund communication advisory services to fund managers to ensure a productive and successful relationship is maintained with current and prospective investors as well as advising on all aspects of the private fund placement process including fund structuring, competitive positioning and market assessment, preparation of fund-related documentation. He can be reached at [email protected].